dtc agreement between croatia and china

8/3/2019 DTC agreement between Croatia and China

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AGREEMENT

BETWEEN

THE GOVERNMENT OF THE PEOPLE'S REPUBLIC OF CHINA

AND

THE GOVERNMENT OF THE REPUBLIC OF CROATIA

FOR THE AVOIDANCE OF DOUBLE TAXATION AND

THE PREVENTION OF FISCAL EVASION WITH RESPECT

TO TAXES ON INCOME

The Government of the People's Republic of China and the Government of the

Republic of Croatia,

Desiring to conclude an Agreement for the avoidance of double taxation and the

prevention of fiscal evasion with respect to taxes on income,

Have agreed as follows:

ARTICLE 1

PERSONAL SCOPE

This Agreement shall apply to persons who are residents of one or both of the

Contracting States.

ARTICLE 2

TAXES COVERED

1. This Agreement shall apply to taxes on income imposed on behalf of a

Contracting State or of its local authorities, irrespective of the manner in which they

are levied.


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2. There shall be regarded as taxes on income all taxes imposed on total income,

or on elements of income, including taxes on gains from the alienation of movable or

immovable property, as well as taxes on capital appreciation.

3. The existing taxes to which the Agreement shall apply are:

(a) in the Republic of China:

(i) the individual income tax;

(ii) the income tax for enterprises with foreign investment and foreign

enterprises;

(iii) the local income tax;

(hereinafter referred to as "Chinese tax" )

(b) in the Republic of Croatia:

(i) the income tax ;

(ii) the profit tax.

(hereinafter referred to as "Croatian tax")

4. This Agreement shall also apply to any identical or substantially similar taxes

which are imposed after the date of signature of the Agreement in addition to, or in

place of, the existing taxes referred to in paragraph 3. The competent authorities of the

Contracting States shall notify each other of any substantial changes which have been

made in their respective taxation laws within a reasonable period of time after such

changes.

ARTICLE 3

GENERAL DEFINITIONS

1. For the purposes of this Agreement, unless the context otherwise requires:

(a) the term "China" means the People's Republic of China; when used in a

geographical sense, means all the territory of the People's Republic of

China, including its territorial sea, in which the Chinese laws relating to

taxation apply, and any area beyond its territorial sea, within which the

People's Republic of China has sovereign rights of exploration for and

exploitation of resources of the sea-bed and its sub-soil and superjacent

water resources in accordance with international law;


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(b) the term "Croatia" meas the whole territory of Croatia in its internationally

recognized boundaries, including its territorial sea, in which the Croatian

laws relating to taxation apply, and any area beyond its territorial sea,

within which the Republic of Croatia has sovereign rights of exploration

for and exploitation of resources of the sea-bed and its sub-soil and

superjacent water resources in accordance with international law;

(c) the terms "a Contracting State" and "the other Contracting State" mean

China or Croatia, as the context requires;

(d) the term "tax" means Chinese tax or Croatinan tax, as the context requires;

(e) the term "person" includes an individual, a company and any other body of

persons;

(f) the term "company" means any body corporate or any entity which is

treated as a body corporate for tax purposes;

(g) the terms "enterprise of a Contracting State" and "enterprise of the other

Contracting State" mean, respectively, an enterprise carried on by a

resident of a Contracting State and an enterprise carried on by a resident of

the other Contracting State;

(h) the term "national" means all individual possessing the nationality of a

Contracting State and all juridical persons created or organized under the

laws of that Contracting State, as well as organizations without juridical

personality treated for tax purposes as juridical persons created ororganized under the lasw of that Contracting State;

(i) the term "international traffic" means any transport by a ship or aircraft

operated by an enterprise of a Contracting State except when the ship or

aircraft is operated solely between places in the other Contracting State;

(j) the term "competent authority" means, in the case of China, the State

Administration of Taxation or its authorized representative, and in the case

of Croatia, the Minister of Finance or his authorized representative.

2. As regards the application of the Agreement by a Contracting State any term

not defined therein shall, unless the context otherwise requires, have the meaning

which it has under the law of that Contracting State concerning the taxes to which the

Agreement applies.

ARTICLE 4


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RESIDENT

1. For the purposes of this Agreement, the term "resident of a Contracting

Statemeans any person who, under the laws of that Contracting State, is liable to tax

therein by reason of his domicile, residence, place of head office (i.e, place ofeffcetive management) or any other criterion of a similar nature.

2. Where by reason of the provisions of paragraph 1 an individual is a resident of

both Contracting States, then his status shall be determined as follows:

(a) he shall be deemed to be a resident of the Contracting State in which he

has a permanent home available to him; if he has a permanent home

available to him in both Contracting States, he shall be deemed to be a

resident only of the Contracting State with which his personal and

economic relations are closer (centre of vital interests) ;

(b) if the State in which he has his centre of vital interests cannot be

determined, or if he has not a permanent home available to him in either

Contracting State, he shall be deemed to be a resident of the State in which

he has an habitual abode;

(c) if he has an habitual abode in both Contracting States or in neither of them,

he shall be deemed to be a resident of the Contracting State of which he is

a national;

(d) if he is a national of both Contracting States or of neither of them, thecompetent authorities of the Contracting States shall settle the question by

mutual agreement.

3. Where by reason of the provisions of paragraph 1, a person other than an

individual is a resident of both Contracting States, then it shall be deemed to be a

resident of the Contracting State in which the place of head office (i.e, place of

effective management) is situated.

ARTICLE 5

PERMANENT ESTABLISHMENT

1. For the purposes of this Agreement, the term "permanent establishment"

means a fixed place of business through which the business of an enterprise is wholly

or partly carried on.


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2. The term "permanent establishment" includes especially:

(a) a place of management;

(b) a branch;

(c) an office;

(d) a factory;

(e) a workshop; and

(f) a mine, an oil or gas well, a quarry or any other place of extraction of

natural resources.

3. The term "permanent establishment" likewise encompasses:

(a) A building site, a construction, assembly or installation project or

supervisory activities in connection therewith, but only where such site,

project or activities continue for a period of more than 12 months;

(b) the furnishing of services, including consultant services, by an enterprise

of a Contracting State through employees or other personnel engaged in

the other Contracting State, provided that such activities continue for the

same project or a connected project for a period or periods aggregating

more than 12 months within any 24 month period;

(c) the use of an installation or drilling rig or ship in a Contracting State to

explore for or exploit natural resources constitutes a permanent

establishment only if such use is for more than 12 months.

4. Notwithstanding the preceding provisions of 1 to 3, the term "permanent

establishment" shall be deemed not to include:

(a) the use of facilities solely for the purpose of storage, display or delivery of

goods or merchandise belonging to the enterprise;

(b) the maintenance of a stock of goods or merchandise belonging to the

enterprise solely for the purpose of storage, display or delivery;

(c) the maintenance of a stock of goods or merchandise belonging to the

enterprise solely for the purpose of processing by another enterprise;


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(d) the maintenance of a fixed place of business solely for the purpose of

purchasing goods or merchandise or of collecting information, for the

enterprise;

(e) the maintenance of a fixed place of business solely for the purpose of

carrying on, for the enterprise, any other activity of a preparatory orauxiliary character;

(f) the maintenance of a fixed place of business solely for any combination of

activities mentioned in sub-paragraphs (a) to (e), provided that the overall

activity of the fixed place of business resulting from this combination is of

a preparatory or auxiliary character.

5. Notwithstanding the provisions of paragraphs 1 and 2, where a person - other

than an agent of an independent status to whom the provisions paragraph 6 applies - is

acting in a Contracting State on behalf of an enterprise of the other Contracting State,

has and habitually exercises, an authority to conclude contracts in the name of the

enterprise, that enterprise shall be deemed to have a permanent establishment in the

first-mentioned Contracting State in respect of any activities which that person

undertakes for the enterprise, unless the activities of such person are limited to those

mentioned in paragraph 4 which, if exercised through a fixed place of business, would

not make this fixed place of business a permanent establishment under the provisions

of that paragraph.

6. An enterprise of a Contracting State shall not be deemed to have a permanent

establishment in Contracting State merely because it carries on business in that other

Contracting State through a broker, general commission agent or any other agent of anindependent status, provided that such persons are acting in the ordinary course of

their business. However, when the activities of such an agent are devoted wholly or

almost wholly on behalf of that enterprise, he will not be considered an agent of an

independent status within the meaning of this paragraph.

7. The fact that a company which is a resident of a Contracting State controls or

is controlled by a company which is a resident of the other Contracting State, or

which carries on business in that other State (whether through a permanent

establishment or otherwise), shall not of itself constitute either company a permanent

establishment of the other.

ARTICLE 6

INCOME FROM IMMOVABLE PROPERTY


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1. Income derived by a resident of a Contracting State from immovable

property situated in the other Contracting State may be taxed in that other Contracting

State.

2. The term "immovable property" shall have the meaning which it has under

the law of the Contracting State in which the property in question is situated. The termshall in any case include property accessory to immovable property, livestock and

equipment used in agriculture and forestry, rights to which the provisions of general

law respecting landed property apply, usufruct of immovable property and rights to

variable or fixed payments as consideration for the working of, or the right to work,

mineral deposits, sources and other natural resources. Ships and aircraft shall not be

regarded as immovable property.

3. The provisions of paragraph 1 shall apply to income derived from the direct

use, letting, or use in any other form of immovable property.

4. The provisions of paragraphs 1 and 3 shall also apply to the income from

immovable property of an enterprise and to income from immovable property used for

the performance of independent personal services.

ARTICLE 7

BUSINESS PROFITS

1. The profits of an enterprise of a Contracting State shall be taxable only in thatContracting State unless the enterprise carries on business in the other Contracting

State through a permanent establishment situated therein. If the enterprise carries on

business as aforesaid, the profits of the enterprise may be taxed in the other

Contracting State, but only so much of them as is attributable to that permanent

establishment.

2. Subject to the provisions of paragraph 3, where an enterprise of a Contracting

State carries on business in the other Contracting State through a permanent

establishment situated therein, there shall in each Contracting State be attributed to

that permanent establishment the profits which it might be expected to make if it were

a distinct and separate enterprise engaged in the same or similar activities under the

same or similar conditions and dealing wholly independently with the enterprise of

which it is a permanent establishment.

3. In determining the profits of a permanent establishment, there shall be

allowed as deductions expenses which are incurred for the purposes of the business of

the permanent establishment, including executive and general administrative expenses


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so incurred, whether in the State in which the permanent establishment is situated or

elsewhere.

4. Insofar as it has been customary in a Contracting State to determine the

profits to be attributed to a permanent establishment on the basis of an apportionment

of the total profits of the enterprise to its various parts, nothing in paragraph 2 shallpreclude that Contracting State from determining the profits to be taxed by such an

apportionment as may be customary. The method of apportionment adopted shall,

however, be such that the result shall be in accordance with the principles contained

in this Article.

5. No profits shall be attributed to a permanent establishment by reason of the

mere purchase by that permanent establishment of goods or merchandise for the

enterprise.

6. For the purposes of paragraphs 1 to 5, the profits to be attributed to the

permanent establishment shall be determined by the same method year by year unless

there is good and sufficient reason to the contrary.

7. Where profits include items of income which are dealt with separately in

other Articles of this Agreement, then the provisions of those Articles shall not be

affected by the provisions of this Article.

ARTICLE 8

SHIPPING AND AIR TRANSPORT

1. Profits from the operation of ships or aircraft in international traffic carried on

by an enterprise of a Contracting State shall be taxable only in that Contracting State.

2. The provisions of paragraph 1 shall also apply to profits from the

participation in a pool, a joint business or an international operating agency.

ARTICLE 9

ASSOCIATED ENTERPRISES

1. Where

(a) an enterprise of a Contracting State participates directly or indirectly in the

management, control or capital of an enterprise of the other Contracting


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State, or

(b) the same persons participate directly or indirectly in the management,

control or capital of an enterprise of a Contracting State and an enterprise

of the other Contracting State,

and in either case conditions are made or imposed between the two

enterprises in their commercial or financial relations which differ from

those which would be made between independent enterprises, then any

profits which would, but for those conditions, have accrued to one of the

enterprises, but, by reason of those conditions, have not so accrued, may

be included in the profits of that enterprise and taxed accordingly.

2. Where a Contracting State includes in the profits of an enterprise of that

Contracting State - and taxes accordingly - profits on which an enterprise of the other

Contracting State has been charged to tax in that other Contracting State and the

profits so included are profits which would have accrued to the enterprise of the

first-mentioned Contracting State if the conditions made between the two enterprises

had been those which would have been made between independent enterprises, then

that other State shall make an appropriate adjustment to the amount of the tax charged

therein on those profits. In determining such adjustment, due regard shall be had to

the other provisions of this Agreement and the competent authorities of the

Contracting States shall, if necessary, consult each other.

ARTICLE 10

DIVIDENDS

1. Dividends paid by a company which is a resident of a Contracting State to a

resident of the other Contracting State may be taxed in that other Contracting State.

2. However, such dividends may also be taxed in the Contracting State of which

the company paying the dividends is a resident and according to the laws of that

Contracting State, but if the recipient is the beneficial owner of the dividends the tax

so charged shall not exceed 5 per cent of the gross amount of the dividends.

The provisions of this paragraph shall not affect the taxation of the company in

respect of the profits out of which the dividends are paid.

3. The term "dividends" as used in this Article means income from shares, or

other rights, not being debt-claims, participating in profits, as well as income from

other corporate rights which is subjected to the same taxation treatment as income

from shares by the laws of the State of which the company making the distribution is


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a resident.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of

the dividends, being a resident of a Contracting State, carries on business in the other

Contracting State of which the company paying the dividends is a resident, through a

permanent establishment situated therein, or performs in that other Contracting Stateindependent personal services from a fixed base situated therein, and the holding in

respect of which the dividends are paid is effectively connected with such permanent

establishment or fixed base. In such case the provisions of Article 7 or Article 14, as

the case may be, shall apply.

5. Where a company which is a resident of a Contracting State derives profits or

income from the other Contracting State, that other Contracting State may not impose

any tax on the dividends paid by the company, except insofar as such dividends are

paid to a resident of that other Contracting State or insofar as the holding in respect of

which the dividends are paid is effectively connected with a permanent establishment

or a fixed base situated in that other Contracting State, nor subject the company's

undistributed profits to a tax on the company's undistributed profits, even if the

dividends paid or the undistributed profits consist wholly or partly of profits or

income arising in such other Contracting State.

ARTICLE 11

INTEREST

1. Interest arising in a Contracting State and paid to a resident of the other

Contracting State may be taxed in that other Contracting State.

2. However, such interest may also be taxed in the Contracting State in which it

arises and according to the laws of that State, but if the recipient is the beneficial

owner of the interest the tax so charged shall not exceed 10 per cent of the gross

amount of the interest.

3. Notwithstanding the provisions of paragraph 2, interest arising in a

Contracting State and derived by the Government of the other Contracting State, a

local authority and the Central Bank thereof or any financial institution wholly owned

by that Government or by any other resident of that Contracting other State with

respect to debt-claims indirectly financed by the Government of that other

Contracting State, a local authority and the Central Bank thereof or any financial

institution wholly owned by the Government shall be exempt from tax in the

first-mentioned Contracting State.

4. The term "interest" as used in this Article means income from debt-claims of

every kind, whether or not secured by mortgage and whether or not carrying a right to


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participate in the debtor's profits, and in particular, income from government

securities and income from bonds or debentures, including premiums and prizes

attaching to such securities, bonds or debentures. Penalty charges for late payment

shall not be regarded as interest for the purpose of this Article.

5. The provisions of paragraphs 1, 2 and 3 shall not apply if the beneficial ownerof the interest, being a resident of a Contracting State, carries on business in the other

Contracting State in which the interest arises, through a permanent establishment

situated therein, or performs in that other Contracting State independent personal

services from a fixed base situated therein, and the debt-claim in respect of which the

interest is paid is effectively connected with such permanent establishment or fixed

base. In such case the provisions of Article 7 or Article 14, as the case may be, shall

apply.

6. Interest shall be deemed to arise in a Contracting State when the payer is the

Government of that Contracting State, a local authority thereof or a resident of that

Contracting State. Where, however, the person paying the interest, whether he is a

resident of a Contracting State or not, has in a Contracting State a permanent

establishment or a fixed base in connection with which the indebtedness on which the

interest is paid was incurred, and such interest is borne by such permanent

establishment or fixed base, then such interest shall be deemed to arise in the

Contracting State in which the permanent establishment or fixed base is situated.

7. Where, by reason of a special relationship between the payer and the

beneficial owner or between both of them and some other person, the amount of the

interest, having regard to the debt-claim for which it is paid, exceeds the amount

which would have been agreed upon by the payer and the beneficial owner in theabsence of such relationship, the provisions of this Article shall apply only to the

last-mentioned amount. In such case, the excess part of the payments shall remain

taxable according to the laws of each Contracting State, due regard being had to the

other provisions of this Agreement.

ARTICLE 12

ROYALTIES

1. Royalties arising in a Contracting State and paid to a resident of the other

Contracting State may be taxed in that other Contracting State.

2. However, such royalties may also be taxed in the Contracting State in which

they arise, and according to the laws of that Contracting State, but if the recipient is

the beneficial owner of the royalties, the tax so charged shall not exceed 10 per cent

of the gross amount of the royalties.


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3. The term "royalties" as used in this Article means payments of any kind

received as a consideration for the use of, or the right to use, any copyright of literary,

artistic or scientific work including cinematograph films and films or tapes for radio

or television broadcasting, any patent, know-how, trade mark, design or model, plan,

secret formula or process, or for the use of, or the right to use, industrial, commercial

or scientific equipment, or for information concerning industrial, commercial orscientific experience.

4. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of

the royalties, being a resident of a Contracting State, carries on business in the other

Contracting State in which the royalties arise, through a permanent establishment

situated therein, or performs in that other Contracting State independent personal

services from a fixed base situated therein, and the right or property in respect of

which the royalties are paid is effectively connected with such permanent

establishment or fixed base. In such case the provisions of Article 7 or Article 14, as

the case may be, shall apply.

5. Royalties shall be deemed to arise in a Contracting State when the payer is the

Government of that Contracting State, a local authority thereof or a resident of that

Contracting State. Where, however, the person paying the royalties, whether he is a

resident of a Contracting State or not, has in a Contracting State a permanent

establishment or a fixed base in connection with which the liability to pay the

royalties was incurred, and such royalties are borne by such permanent establishment

or fixed base, then such royalties shall be deemed to arise in the Contracting State in

which the permanent establishment or fixed base is situated.

6. Where, by reason of a special relationship between the payer and thebeneficial owner or between both of them and some other person, the amount of the

royalties, having regard to the use, right or information for which they are paid,

exceeds the amount which would have been agreed upon by the payer and the

beneficial owner in the absence of such relationship, the provisions of this Article

shall apply only to the last-mentioned amount. In such case, the excess part of the

payments shall remain taxable according to the laws of each Contracting State, due

regard being had to the other provisions of this Agreement.

ARTICLE 13

CAPITAL GAINS

1. Gains derived by a resident of a Contracting State from the alienation of

immovable property referred to in Article 6 and situated in the other Contracting State

may be taxed in that other Contracting State.


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2. Gains from the alienation of movable property forming part of the business

property of a permanent establishment which an enterprise of a Contracting State has

in the other Contracting State or of movable property pertaining to a fixed base

available to a resident of a Contracting State in the other Contracting State for the

purpose of performing independent personal services, including such gains from the

alienation of such a permanent establishment (alone or together with the wholeenterprise) or of such a fixed base, may be taxed in that other Contracting State.

3. Gains from the alienation of ships or aircraft operated in international traffic

or movable property pertaining to the operation of such ships or aircraft by an

enterprise of a Contracting State shall be taxable only in that State.

4. Gains from the alienation of shares of the capital stock of a company the

property of which consists directly or indirectly principally of immovable property

situated in a Contracting State may be taxed in that Contracting State.

5. Gains from the alienation of shares other than those mentioned in paragraph 4

representing a participation of at least 25 per cent in a company which is a resident of

a Contracting State may be taxed in that Contracting state.

6. Gains from the alienation of any property other than that referred to in

paragraphs 1 to 5, shall be taxable only in the Contracting State of which the alienator

is a resident.

ARTICLE 14

INDEPENDENT PERSONAL SERVICES

1. Income derived by a resident of a Contracting State in respect of professional

services or other activities of an independent character shall be taxable only in that

Contracting State except in one of the following circumstances, when such income

may also be taxed in the other Contracting State:

(a) if he has a fixed base regularly available to him in the other Contracting

State for the purpose of performing his activities; in that case, only so

much of the income as is attributable to that fixed base may be taxed in

that other Contracting State; or

(b) if his stay in the other Contracting State is for a period or periods

exceeding in the aggregate 183 days in the calendar year concerned; in that

case, only so much of the income as is derived from his activities

performed in that other Contracting State may be taxed in that other

Contracting State.


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2. The term "professional services" includes especially independent scientific,

literary, artistic, educational or teaching activities as well as the independent activities

of physicians, lawyers, engineers, architects, dentists and accountants.

ARTICLE 15DEPENDENT PERSONAL SERVICES

1. Subject to the provisions of Articles 16, 18, 19, 20 and 21, salaries, wages and

other similar remuneration derived by a resident of a Contracting State in respect of

an employment shall be taxable only in that Contracting State unless the employment

is exercised in the other Contracting State. If the employment is so exercised, such

remuneration as is derived therefrom may be taxed in that other Contracting State.

2. Notwithstanding the provisions of paragraph 1, remuneration derived by a

resident of a Contracting State in respect of an employment exercised in the other

Contracting State shall be taxable only in the first-mentioned State if:

(a) the recipient is present in the other Contracting State for a period or

periods not exceeding in the aggregate 183 days in the calendar year

concerned; and

(b) the remuneration is paid by, or on behalf of, an employer who is not a

resident of the other Contracting State; and

(c) the remuneration is not borne by a permanent establishment or a fixed base

which the employer has in the other Contracting State.

3. Notwithstanding the provisions of paragraphs 1 and 2 of this Article,

remuneration derived in respect of an employment exercised aboard a ship or aircraft

operated by an enterprise of a Contracting State in international traffic shall be taxable

only in that Contracting State.

ARTICLE 16

DIRECTORS' FEES

Directors' fees and other similar payments derived by a resident of a Contracting

State in his capacity as a member of the board of directors of a company which is a

resident of the other Contracting State may be taxed in that other Contracting State.

ARTICLE 17

ARTISTES AND SPORTSMEN


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1. Notwithstanding the provisions of Articles 14 and 15, income derived by a

resident of a Contracting State as an entertainer, such as a theatre, motion picture,

radio or television artiste, or a musician, or as a sportsman, from his personal

activities as such exercised in the other Contracting State, may be taxed in that other

Contracting State.

2. Where income in respect of personal activities exercised by an entertainer or a

sportsman in his capacity as such accrues not to the entertainer or sportsman himself

but to another person, that income may, notwithstanding the provisions of Articles 7,

14 and 15, be taxed in the Contracting State in which the activities of the entertainer

or sportsman are exercised.

3. Notwithstanding the provisions of paragraphs 1 and 2, income derived by

entertainers or sportsmen who are residents of a Contracting State from the activities

exercised in the other Contracting State under a plan of cultural exchange between the

Governments of both Contracting States shall be exempt from tax in that other

Contracting State.

ARTICLE 18

PENSIONS

1. Subject to the provisions of paragraph 2 of Article 19, pensions and other

similar remuneration paid to a resident of a Contracting State in consideration of past

employment shall be taxable only in that Contracting State.

2. Notwithstanding the provisions of paragraph 1, pensions paid and other

similar payments made by the Government of a Contracting State or a local authority

thereof under a public welfare scheme of the social security system of that

Contracting State shall be taxable only in that Contracting State.

ARTICLE 19

GOVERNMENT SERVICE

1.

(a) Remuneration, other than pension, paid by the Government of a

Contracting State or a local authority thereof, to an individual in respect of

services rendered to the Government of that Contracting State or a local

authority thereof, in the discharge of functions of a governmental nature,

shall be taxable only in that Contracting State.


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(b) However, such remuneration shall be taxable only in the other Contracting

State if the services are rendered in that other Contracting State and the

individual is a resident of that other Contracting State who:

(i) is a national of that other Contracting State; or

(ii) did not become a resident of that other Contracting State solely for the

purpose of rendering the services.

2.

(a) Any pension paid by, or out of funds, to which contributions are made by

the Government of a Contracting State or a local authority thereof to an

individual in respect of services rendered to the Government of that

Contracting State or a local authority thereof shall be taxable only in that

Contracting State.

(b) However, such pension shall be taxable only in the other Contracting

State if the individual is a resident of, and a national of, that other

Contracting State.

3. The provisions of Articles 15, 16, 17 and 18 shall apply to remuneration,

and pensions in respect of services rendered in connection with a business carried on

by the Government of a Contracting State or a local authority thereof.

ARTICLE 20

TEACHERS PROFESSORS AND RESEARCHERS

1. An individual who is, or immediately before visiting a Contracting State was,

a resident of the other Contracting State and is present in the first-mentioned

Contracting State for the primary purpose of teaching, giving lectures or conducting

research at a university, college, school or educational institution or scientific research

institution accredited by the Government of the first-mentioned Contracting State,

shall be exempt from tax in the first-mentioned Contracting State, for a period of two

years from the date of his first arrival in the first-mentioned Contracting State, in

respect of remuneration from such teaching, lectures or research.

2. This Article shall not apply to income from research if such research is

undertaken not in the public interest but primarily for the private benefit of a specific

person or persons.

ARTICLE 21

STUDENTS AND TRAINEES


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1. A student, business apprentice or trainee who is or was immediately before

visiting a Contracting State a resident of the other Contracting State and who is

present in the first-mentioned State solely for the purpose of his education, training

shall be exempt from tax in that first-mentioned State on the following payments or

income received or derived by him for the purpose of his maintenance, education ortraining::

(a) payments derived from sources outside that Contracting State for the

purpose of his maintenance, education, study, research or training;

(b) grants scholarships or awards supplied by the Government, or a scientific,

educational, cultural or other tax-exempt organization: and

(c) income derived from personal services performed in that Contracting State.

ARTICLE 22

OTHER INCOME

1. Items of income of a resident of a Contracting State, wherever arising, not

dealt with in the foregoing Articles of this Agreement shall be taxable only in that

Contracting State.

2. The provisions of paragraph 1 shall not apply to income, other than income

from immovable property as defined in paragraph 2 of Article 6, if the recipient of

such income, being a resident of a Contracting State, carries on business in the otherContracting State through a permanent establishment situated therein, or performs in

that other Contracting State independent personal services from a fixed base situated

therein, and the right or property in respect of which the income is paid is effectively

connected with such permanent establishment or fixed base. In such case the

provisions of Article 7 or Article 14, as the case may be, shall apply.

ARTICLE 23

METHODS FOR ELIMINATION OF DOUBLE TAXATION

1. In China, double taxation shall be eliminated as follows:

(a) where a resident of China derives income from Croatia the amount of tax

on that income payable in Croatia in accordance with the provisions of this

Agreement, may be credited against the Chinese tax imposed on that

resident. The amount of the credit, however, shall not exceed the amount

of the Chinese tax on that income computed in accordance with the


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taxation laws and regulations of China.

(b) where the income derived from Croatia is a dividend paid by a company

which is a resident of Croatia to a company which is a resident of China

and which owns not less than 10 per cent of the shares of the company

paying the dividend, the credit shall take into account the tax paid inCroatia by the company paying the dividend in respect of the profits out of

which the dividend is paid.

2. In Croatia, double taxation shall be eliminated as follows:

Where a resident of Croatia derives income which, in accordance with the

provisiona of this Agreement, may by taxed in the People's Republic of China,

Croatia shall allow as a deduction from the tax on the income of that resident an

amount equal to the income tax paid in the People's Republic of China, whether

directly or by deduction. Such deduction shall not, however, exceed that part of the

income tax (as computed before the deduction is given) which is attributable to the

income which may be taxed in the People's Republic of China.

ARTICLE 24

NON-DISCRIMINATION

1. Nationals of a Contracting State shall not be subjected in the other

Contracting State to any taxation or any requirement connected therewith, which is

other or more burdensome than the taxation and connected requirements to which

nationals of that other Contracting State in the same circumstances, are or may besubjected. The provisions of this paragraph shall, notwithstanding the provisions of

Article 1, also apply to persons who are not residents of one or both of the

Contracting States.

2. The taxation on a permanent establishment which an enterprise of a

Contracting State has in the other Contracting State shall not be less favourably levied

in that other Contracting State than the taxation levied on enterprises of that other

Contracting State carrying on the same activities. The provisions of this paragraph

shall not be construed as obliging a Contracting State to grant to residents of the other

Contracting State any personal allowances, reliefs and reductions for taxation

purposes on account of civil status or family responsibilities which it grants to its own

residents.

3. Except where the provisions of paragraph 1 of Article 9, paragraph 7 of

Article 11, or paragraph 6 of Article 12, apply, interest, royalties and other

disbursements paid by an enterprise of a Contracting State to a resident of the other

Contracting State shall, for the purpose of determining the taxable profits of such


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enterprise, be deductible under the same conditions as if they had been paid to a

resident of the first-mentioned State.

4. Enterprises of a Contracting State, the capital of which is wholly or partly

owned or controlled, directly or indirectly, by one or more residents of the other

Contracting State, shall not be subjected in the first-mentioned State to any taxation orany requirement connected therewith which is other or more burdensome than the

taxation and connected requirements to which other similar enterprises of the

first-mentioned State are or may be subjected.

ARTICLE 25

MUTUAL AGREEMENT PROCEDURE

1. Where a person considers that the actions of one or both of the Contracting

States result or will result for him in taxation not in accordance with the provisions of

this Agreement, he may, irrespective of the remedies provided by the domestic law of

those States, present his case to the competent authority of the Contracting State of

which he is a resident or, if his case comes under paragraph 1 of Article 24, to that of

the Contracting State of which he is a national. The case must be presented within

three years from the first notification of the action resulting in taxation not in

accordance with the provisions of the Agreement.

2. The competent authority shall endeavour, if the objection appears to it to be

justified and if it is not itself able to arrive at a satisfactory solution, to resolve the

case by mutual agreement with the competent authority of the other Contracting State,

with a view to the avoidance of taxation which is not in accordance with theprovisions of this Agreement. Any agreement reached shall be implemented

notwithstanding any time limits in the domestic law of the Contracting States.

3. The competent authorities of the Contracting States shall endeavour to resolve

by mutual agreement any difficulties or doubts arising as to the interpretation or

application of the Agreement. They may also consult together for the elimination of

double taxation in cases not provided for in the Agreement.

4. The competent authorities of the Contracting States may communicate with

each other directly for the purpose of reaching an agreement in the sense of

paragraphs 2 and 3. When it seems advisable for reaching agreement, representatives

of the competent authorities of the Contracting States may meet together for an oral

exchange of opinions.

ARTICLE 26


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EXCHANGE OF INFORMATION

1. The competent authorities of the Contracting States shall exchange such

information as is necessary for carrying out the provisions of this Agreement or of the

domestic laws of the Contracting States concerning taxes covered by the Agreement

insofar as the taxation thereunder is not contrary to the Agreement, in particular forthe prevention of evasion of such taxes. The exchange of information is not restricted

by Article 1. Any information received by a Contracting State shall be treated as

secret and shall be disclosed only to persons or authorities (including courts and

administrative bodies) involved in the assessment or collection of, the enforcement or

prosecution in respect of, or the determination of appeals in relation to, the taxes

covered by the Agreement. Such persons or authorities shall use the information only

for such purposes. They may disclose the information in public court proceedings or

in judicial decisions.

2. In no case shall the provisions of paragraph 1 be construed so as to impose on

a Contracting State the obligation:

(a) to carry out administrative measures at variance with the laws and

administrative practice of that or of the other Contracting State;

(b) to supply information which is not obtainable under the laws or in the

normal course of the administration of that or of the other Contracting

State;

(c) to supply information which would disclose any trade, business, industrial,

commercial or professional secret or trade process, or information, thedisclosure of which would be contrary to public policy (ordre public) .

ARTICLE 27

DIPLOMATIC AGENTS AND CONSULAR OFFICERS

Nothing in this Agreement shall affect the fiscal privileges of members of

diplomatic agents or consular officers under the general rules of international law or

under the provisions of special agreements.

ARTICLE 28

ENTRY INTO FORCE

The Agreement shall enter into force on the thirtieth day after the dtae on which

diplomatic notes indicating the completion of internal legal procedures necessary in

each country for the entry into force of this Agreement have been exchanged. This


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Agreement shall have effect as respects income derived during the taxable years

beginning on or after the first day of January next following that in which this

Agreement enters into force.

ARTICLE 29TERMINATION

This Agreement shall continue in effect indefinitely but either of the

Contracting States may, on or before the thirtieth day of June in any calendar year

beginning after the expiration of a period of five years from the date of its entry into

force, give written notice of termination to the other Contracting State through the

diplomatic channels. In such event this Agreement shall cease to have effect as

respects income derived during the taxable years beginning on or after the first day of

January in the calendar year next following that in which the notice of termination is

given.

IN WITNESS whereof the undersigned, duly authorized thereto, have signed

this Agreement.

Done at Beijing on the 9th day of January 1995, in duplicate in the Chinese,

Croatian and English languages, all three texts being equally authentic.

In case of any divergence of interpretation, the English text shall prevail.

On behalf of

the Government of the Peoples

Republic of China

On behalf of


Republic of Croatia


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PROTOCOL

Republic of CroatiaAt the signing of the Agreement between the Government

of the People's Republic of China and the Government of the Republic of Croatia forthe Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect

to Taxes on Income both sides have agreed upon the following provisions which form

an integral part of the Agreement:

1. In respect of Article 8, it is understood that China shall exempt the business

tax on the operation of ships or aircraft in international traffic carried on by an

enterprise of Croatia and Croatia shall exempt any tax similar to the business tax in

China on the operation of ships or ships or aircraft in international traffic carried on

by an enterprise of China.

2. In respect of Article 15, it is understood that employees who are nationals of a

Contracting State and sent by the shipping or air transportation enterprises of a

Contracting State to the other Contracting State shall be taxable on their wages,

salaries or other similar remuneration only in that Contracting State.

IN WITNESS whereof the undersigned, duly authorized thereto, have signed

this Agreement.

Done at Beijing on the 9th day of January 1995, in duplicate in the Chinese,

Croatian and English languages, all three texts being equally authentic.

In case of any divergence of interpretation, the English text shall prevail.

On behalf of


Republic of China

On behalf of


Republic of Croatia

dtc agreement between croatia and china

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